Dear Wall Street friend,
I am writing this letter because I like you. I know we have differences, especially in the way we look at financial institutions that dominated the last century of history, but I understand where it comes from.
You are a smart and communicative person, banks and managers have identified your potential, they have offered you a well-paid career and a financial education in line with the trustee system. I suddenly look obsessed and tell you that an anonymous person has created digital money, a technology that, besides being a unique investment, will revolutionize humanity and upend everything you’ve learned from your successful billionaire employers. .
I must seem crazy at first glance, but be patient and read this letter to the end. I am writing from the bottom of my heart.
This isn’t a definitive article that will convince you that bitcoin is your best investment or why it represents the biggest social disruption of this century. My intention is just to give you some caveats and suggestions on how to approach this topic so that you can find your way down the Bitcoin rabbit hole.
Bitcoin is a Threat to the Financial Industry
This may scare you, but I cannot say otherwise. Bitcoin is indeed a threat to the entire financial industry. As the adoption of Bitcoin increases, the trend is that all funds, banks, brokers, investment banking etc. sector will decrease.
Please don’t let this fact deter you from understanding Bitcoin in depth. Those who understand the orange coin today are only a fraction of the entire population who will adopt the technology in the future. Even if you have a pessimistic view of the investment sector, the opportunity you will see is so great that you will soon forget about the deterioration in the sector that employs you.
Bitcoin Is Not A Company
Bitcoin is a strange beast, but especially strange if you try to understand income-generating assets like companies, real estate, and debt through the lens of traditional analysis. Even for someone who has been obsessed with the subject for years like me, Bitcoin is hard to define.
My suggestion is to approach Bitcoin from a network technology perspective. Look for parallels in the evolution of the Internet, decentralized peer-to-peer networks such as Tor or BitTorrent, and even shipping and airlines.
And of course, be sure to study the history of money. Placing bitcoin and fiat money on an evolutionary timeline would make it clear that this story is far more dynamic than central bank advocates would like to admit.
Bitcoin is the Revolution of Individuals, Not Institutions
Do not look for the value of Bitcoin in big financial institutions and gurus. Its value lies in anonymous people who make a conscious decision to participate in the protection of the Bitcoin network by purchasing their own household equipment and saving through small weekly bitcoin purchases.
This is quite different from what you are used to. In the world of trust, names, surnames, positions and institutions are intermediaries of great importance and value. In Bitcoin, the opinions of Jamie Dimon, Warren Buffet and BlackRock CFO matter little. What makes this technology inevitable is the existence of an anonymous, uncompromising and unstoppable minority.
Try to understand what this minority is thinking, what motivates them, how they interact with Bitcoin, and why it’s so hard to stop them. Next time Charlie Munger has his opinion on this, ignore it.
Bitcoin’s Technical Nuances Matter
You may not be interested in understanding the difference between asymmetric key cryptography and the hash function, or the difference between computation and predicate validation. Understanding the governance nuances of an open source project, or what a soft fork means, and Bitcoin’s tendency to avoid investing in hard forks may also not seem so important. I understand you, these are specific ideas and they are not part of your daily life.
But know that these concepts make a difference, especially when you want to understand why Bitcoin is different from all altcoins. Take the time to explore how Bitcoin works on a deeper level than articles on financial news portals. Some technical details are needed to understand the guarantees that Bitcoin offers and why they are unique compared to all existing projects in the “crypto” world.
Austrian Economy Study
I’ve heard big names on Wall Street claim that bitcoin has “no more value” than is reasonable. After several years of not understanding this “fact” I learned that many economists with advanced degrees in finance have not even read an article by Friedrich Hayek or Ludwig von Mises.
Putting aside linear regressions and differential modeling for a while to focus on the ideas of Carl Menger and his followers will be of great value to your Bitcoin journey. I promise you won’t become a goldfish overnight, but at least you will understand that the term “intrinsic value” is meaningless.
Everything will be fine
This journey will not be comfortable. Realizing that the investment industry, arguably the strongest sector of the economy in the last 50 years, is about to shake, and realizing that many of your status-laden billionaire bosses’ teachings aren’t exactly the best at a job. The fiat world will suffer but it will heal. As I told you at the beginning of this letter, you are a smart and communicative person, once your Bitcoin domino you will face one of the biggest opportunities of your life; And I promise you, after the initial fear, all that remains is inexhaustible optimism.
This is a guest post by João Grilo. The opinions expressed are their own and may not necessarily reflect the views of BTC Inc. or Bitcoin Magazine.